1h 2009 financial results - keppel reit · 2018. 9. 22. · 2q 2009 distributable income up 23.4%...
TRANSCRIPT
1H 2009 FINANCIAL RESULTS
20 Jul 2009
1
�Operations Review
�Portfolio Analysis
�Capital Management
�Market Review & Outlook
Contents
2
�Market Review & Outlook
�Going Forward
Highlights
�� 1H 2009 distributable income 29.6% y-o-y
�� Net property income 26.3% y-o-y
�� Portfolio with 94.9% committed occupancy
�� Average portfolio gross rental rate in Jun 2009 10.3% y-o-y
3
�� Average portfolio gross rental rate in Jun 2009 10.3% y-o-y
�� Aggregate leverage maintained at 27.6%
�� Debt maturity only in 2011
Operations Review
4
Operations Review
1H 2009 Distributable Income
Up 29.6%
($'000) 1H 2009 1H 2008 Change % Chg
Property Income 30,142 24,495 5,647 23.1
Net Property Income 23,136 18,315 4,821 26.3
Distributable Income 33,154 25,581 7,573 29.6
to Unitholders
5
(1) Based on K-REIT Asia’s closing unit price of $0.975 as at 30 Jun 2009
(2) Based on K-REIT Asia’s closing unit price of $1.39 as at 30 Jun 2008
to Unitholders
Distribution Per Unit (cents) 5.00 3.94 1.06 26.9
Distribution Yield (%) 10.3 5.7 4.6 80.7(2)(1)
2Q 2009 Distributable Income
Up 23.4%
($'000) 2Q 2009 2Q 2008 Change % Chg
Property Income 15,357 12,989 2,368 18.2
Net Property Income 12,316 9,174 3,142 34.2
Distributable Income 17,496 14,176 3,320 23.4
to Unitholders
6
(1) Based on K-REIT Asia’s closing unit price of $0.975 as at 30 Jun 2009
(2) Based on K-REIT Asia’s closing unit price of $1.39 as at 30 Jun 2008
to Unitholders
Distribution Per Unit (cents) 2.64 2.18 0.46 21.1
Distribution Yield (%) 10.9 6.3 4.6 73.0(2)(1)
Quarter-on-Quarter Performance
($'000) 2Q 2009 1Q 2009 Change % Chg
Property Income 15,357 14,785 572 3.9
Net Property Income 12,316 10,820 1,496 13.8
Distributable Income 17,496 15,658 1,838 11.7
7
(1) Based on K-REIT Asia’s closing unit price of $0.975 as at 30 Jun 2009
(2) Based on K-REIT Asia’s closing unit price of $0.595 as at 31 Mar 2009
Distributable Income 17,496 15,658 1,838 11.7
to Unitholders
Distribution Per Unit (cents) 2.64 2.38 0.26 10.9
Distribution Yield (%) 10.9 16.2 (5.3) (32.7)(2)(1)
Rising DPUs
8.82 8.91
10.08
8
9
10
11
DP
U (
cen
ts)
8
(1) Based on annualised DPU for 1H 2009; distribution for 1H 2009 was 5.00 cents per unit
(1)
6.76
5
6
7
FY2006 FY2007 FY2008 FY2009 (Annualised)
DP
U (
cen
ts)
Attractive Distribution Yield
As at 30 Jun 2009
Net Yields:
Local
Corporates
(with 10% tax)
9.3%
Foreign
10.3%10.8%
5.0%Tax Free
for
Individuals
9
(1) Based on annualised 1H 2009 distribution per unit of 10.08 cents and unit price of $0.975 on 30 Jun 2009
(2) Based on 12-month gross dividend yield of stocks in the FTSE ST Real Estate Investment Trust Index as at 30 Jun 2009
(3) Based on 12-month gross dividend yield of stocks in the FTSE ST Real Estate Index as at 30 Jun 2009
Foreign
Corporates
(with 17% tax)
8.5%
(1)
(2)
2.6% 2.5%
0.5%
K-REIT Asia
Annualised 1H
2009 DPU Yield
FTSE ST REIT
Index Yield
FTSE ST RE Index
Yield
10-year Govt
Bond Yield
CPF Ordinary
Account
DBS 12-month
S$ fixed deposit
rate
Individuals
(3)
Healthy Balance Sheet
� Aggregate leverage maintained at 27.6%
As at
($ million) 30 Jun 2009
Non-current Assets 2,021.4
Total Assets 2,080.1
10
Borrowings 578.0
Total Liabilities 608.8
Unitholders' Funds 1,471.3
Net Asset Value Per Unit $2.22
Adjusted Net Asset Value Per Unit (2)
$2.17
(1) Source: UOBKayHian Research, 11 May 2009
(2) Excluding distributable income for 1H 2009
Recent Awards
One Raffles Quay
• BCA Green Mark Gold Award
Singapore Corporate Awards 2009
• Best Annual Report Award (Silver)
11
• Best Annual Report Award (Silver)
"Reits'' category
• Best Investor Relations Award
(Silver) "$300m to less than $1b
market capitalisation'' category
Portfolio Analysis
12
Portfolio Analysis
Broad Tenant Diversity
Tenant Business Sector by Net Lettable Area as at 30 Jun 2009
Accounting &
consultancy services
4.0%
Real estate & property
Services
9.3%
Shipping & marine
services
7.4%
13
111 tenants
in total
Banking, insurance &
financial services
35.4%
Conglomerate
8.7%Government agency
7.3%
Hospitality & leisure
3.0%
IT services & consultancy
5.7%
Others
6.6%
Pharmaceuticals &
healthcare
4.4%
services
8.2%
Blue-chip Tenants
Portfolio’s Top 10 Tenants by Net Lettable Area as at 30 Jun 2009
6.5%
6.8%
7.3%
8.0%
UBS AG
GE Pacific
I.E.Singapore
Deutsche Bank
14
Total 51.8%of portfolio’s
net lettable
area
Keppel Towers and GE Tower
Bugis Junction Towers
One Raffles Quay 2.7%
3.0%
3.1%
4.0%
5.0%
5.4%
Barclays PLC Singapore
Intercontinental Hotels
Credit Suisse
Ernst & Young
Keppel Land
ABN AMRO
Occupancy Rate
� 94.9% committed occupancy of portfolio as at 30 Jun 2009
higher than core CBD occupancy of 91.5% (1)
K-REIT Asia’s AssetsAs at
30 Jun 2009
As at
31 Dec 2008
Change in
Vacancy
Prudential Tower 87.7% 92.3% 5,016 sf
15
(1) Source: CBRE
Keppel Towers and GE Tower 93.3% 99.2% 25,804 sf
Bugis Junction Towers 91.5% 100% 20,968 sf
One Raffles Quay (1/3 stake) 100% 100% -
Portfolio 94.9% 99% 51,788 sf
Long Lease Terms
Provide Stable Income
% of Portfolio’s Net Lettable Area (NLA) Accounted by Long Lease Terms
� Weighted average lease term to expiry for
• Portfolio: 5.4 years
• Top 10 tenants who account for 51.8% of portfolio’s NLA: 7.1 years
� 28.2% of portfolio’s NLA accounted by long lease terms(1)
16
% of Portfolio’s Net Lettable Area (NLA) Accounted by Long Lease Terms
(1) Long lease terms are those with lease term to expiry of at least 5 years
Long lease terms
28.2%
Short lease terms
71.8%
Portfolio Lease Profile
Lease Profile as a % of Net Lettable Area as at 30 Jun 2009
20%
16.6% 16.7%
� Gross rental income based on committed leases for FY2009
already exceeds FY2008’s total gross rental income
17
5.4%
9.5%
2.6%
6.3%
11.5%
8.1%9.7%
2H 2009 2010 2011 2012 2013
Lease Expiry as a Percentage of Portfolio's Total NLA (including 1/3 One Raffles Quay)
Rent Reviews as a Percentage of Portfolio's Total NLA (including 1/3 One Raffles Quay)
2009 Lease Profile by Asset
As at 30 Jun
2009
Net Lettable Area (NLA)
Leases Expiring
in
Jul-Dec 09 (sf)
% of
Portfolio’s
NLA
Leases Subject
to Rent
Review in
Jul-Dec 09 (sf)
% of
Portfolio’s
NLA
� Only 5.4% of portfolio’s NLA up for lease expiry in 2H 2009
18
Jul-Dec 09 (sf)
PT 18,762 1.5% - -
KTGE 44,371 3.6% - -
BJT - - - -
ORQ (1/3 stake) 3,731 0.3% 31,915 2.6%
Total 66,864 5.4% 31,915 2.6%
(1) PT: Prudential Tower; KTGE: Keppel Towers and GE Tower; BJT: Bugis Junction Towers; ORQ: One Raffles Quay
Improved Average Portfolio Rent
� Average portfolio rent in Jun 2009: $8.13 psf pm(1)
• $7.11 psf pm, excluding 1/3 ORQ
$6.86
$7.37 $7.43$7.61
$8.068.13
Average Portfolio Gross Rental Rates
19(1) Includes income support from one-third interest in One Raffles Quay (ORQ), with effect from Dec 2007
$4.28$4.43
$6.02
$6.86
Jun
2007
Sep
2007
Dec
2007
Mar
2008
Jun
2008
Sep
2008
Dec
2008
Mar
2009
Jun
2009
psf per month
Capital Management
20
Capital Management
Prudent Financial Management
As at 30 Jun 2009
Gross Borrowings (1) $581.1m
Aggregate Leverage 27.6%
� Aggregate leverage will exceed 60% limit only if average
portfolio valuation falls by more than 54%
21
Aggregate Leverage 27.6%
All-in Interest Rate 4.26%
Interest Coverage Ratio (2) 3.18 times
Weighted Average Term to Expiry 1.8 years
Corporate Rating (by Moody’s) Baa3
(1) Includes unamortised portion of fees of $3.0 million
(2) Interest coverage ratio = Ratio of year-to-date earnings before interest, tax, depreciation and
amortisation to interest expense
Debt Maturity Only In 2011
� About 2/3 of total debt is unsecured
� $1 billion medium-term note programme in place
Debt Profile as at 30 Jun 2009
22
$391m
$190m
0 100 200 300 400
Floating-rate
unsecured loan
Fixed-rate
mortgage loanMaturing in May 2011
Maturing in Mar 2011
Market Review and Outlook
23
Market Review and Outlook
Market Sentiments Improve
� Uncertainty in global economic outlook
• Singapore office demand likely to be subdued in 2009
� Some positive signs of bottoming
• Collective efforts by worldwide governments prevent downturn
from worsening
• Singapore government revises 2009 GDP forecast upwards to
24
• Singapore government revises 2009 GDP forecast upwards to
between -6% and -4%
• Investment sales and leasing activities starting to pick up slowly
� Delays in construction of office projects have reduced
supply
• New office supply, 2Q 2009-2012, lowered to 5.9 mil sf(1)
(or 1.6 mil sf pa)
(1) Excluding pre-committed space of about 2.4 million sf as estimated by CBRE
Moderation in Rents Eases in 2Q
Singapore Office Market Occupancy and Rentals(1)
97.3% 97.1% 97.6% 97.6% 97.1% 96.2% 95.4% 93.1% 91.5%
80%
100%
$16
$18
$20
� Companies driven to relocate outside CBD may return
25
10.8012.60
15.0016.00 16.10 16.10
12.90
10.508.60
12.40
14.90
17.1518.65 18.80 18.80
15.00
12.30
10.15
0%
20%
40%
60%
$4
$6
$8
$10
$12
$14
30-Jun-07 30-Sep-07 31-Dec-07 31-Mar-08 30-Jun-08 30-Sep-08 31-Dec-08 31-Mar-09 30-Jun-09
Average Prime Rentals ($ psf pm) Average Grade A Rentals ($ psf pm) Core CBD Occupancy
(1) Source: CBRE
Singapore: Key Business
Destination in Longer Term
� Singapore:
• Remains a key investment market in Asia
– 4th in Forbes magazine's 2009 ranking of the best countries to
do business
• Diversifying beyond a financial hub and establishing multi-
hubs in various industry sectors
26
hubs in various industry sectors
• In the medium term: Positive spin-offs for office sector with
transformation of Singapore into a global city and the
completion of the two integrated resorts
Competitive Occupancy Costs
in Singapore
� CBRE survey:
• Singapore ranked #15
– Below Tokyo, Hong Kong, Mumbai and New Delhi
– Compared to #9 a year ago
Rank Market US$/sq ft
CBRE’s Global 50 Index for Office Occupancy Costs, May 2009
Rank Market US$/sq ft
27
Rank Market US$/sq ft
per year
1 Tokyo (Inner Central), Japan 183.62
2 London (West End), England 172.62
3 Moscow, Russia 170.24
4 Hong Kong (Central CBD) 150.42
5 Tokyo (Outer Central), Japan 149.58
6 Mumbai, India 131.04
7 Dubai, United Arab Emirates 122.52
8 Paris, France 114.89
Rank Market US$/sq ft
per year
9 London (City), England 103.50
10 Dublin, Ireland 93.56
11 Abu Dhabi, United Arab Emirates 91.21
12 New Delhi, India 86.94
13 Paris La Defense, France 86.04
14 Hong Kong (Citywide) 84.47
15 Singapore 82.79
Going Forward
28
Going Forward
Meeting Challenges Ahead
� Priority on tenant retention and proactive asset
management
� Opportunities for selective asset acquisitions
29
Thank You
30
The value of units in K-REIT Asia (“Units”) and the income from them may fall as well as rise. Units are not obligations of,
deposits in, or guaranteed by, the Manager or any of its affiliates. An investment in Units is subject to investment risks,
including the possible loss of the principal amount invested. Investors have no right to request the Manager to redeem their
Units while the Units are listed. It is intended that Unitholders may only deal in their Units through trading on the SGX-ST.
Listing of the Units on the SGX-ST does not guarantee a liquid market for the Units. The past performance of K-REIT Asia is
not necessarily indicative of its future performance. This release may contain forward-looking statements that involve risks
and uncertainties. Actual future performance, outcomes and results may differ materially from those expressed in forward-
looking statements as a result of a number of risks, uncertainties and assumptions. Representative examples of these
factors include (without limitation) general industry and economic conditions, interest rate trends, cost of capital and
capital availability, competition from similar developments, shifts in expected levels of property rental income, changes in
operating expenses, including employee wages, benefits and training, property expenses and governmental and public
policy changes, and the continued availability of financing in the amounts and terms necessary to support future business.
Investors are cautioned not to place undue reliance on these forward-looking statements, which are based on the
Manager’s current view on future events.
Additional Information
31
Additional Information
Distribution Details
Distribution to Unitholders
Distribution Period 1 Jan 2009 – 30 Jun 2009
Distribution Rate 4.99 cents per unit
- Taxable: 3.83 cents per unit
- Tax-exempt: 1.16 cents per unit
32
Timetable
Last Day of Trading on "cum" Basis 24 Jul 2009, 5.00 pm
Ex-dividend Date 27 Jul 2009, 9.00 am
Books Closure Date 29 Jul 2009
Distribution Payment Date 27 Aug 2009
K-REIT Asia’s
Annual Distribution Yield
� 3 DPU payouts for FY2008
• Due to rights issue exercise concluded on 8 May 2008
Period (Pre-Rights Issue) DPU (cents) Ex-Dividend Date Payment Date
1 Jan 2008 – 7 May 2008 (~4 mths) 6.58 5 May 2008 18 Jun 2008
Period (Post-Rights Issue) DPU (cents) Ex-Dividend Date Payment Date
33
Period (Post-Rights Issue) DPU (cents) Ex-Dividend Date Payment Date
8 May 2008 – 30 Jun 2008 (~2 mths) 1.39 1 Aug 2008 28 Aug 2008
1 Jul 2008 – 31 Dec 2008 (6 mths) 5.07 23 Jan 2009 23 Feb 2009
8 May 2008 – 31 Dec 2008 6.46
TOTAL (1 Jan 2008 – 31 Dec 2008) 13.04 13.37% yield(1)
(1) Based on K-REIT Asia’s closing unit price of $0.975 as at 30 Jun 2009
Snapshot of K-REIT Asia
Manager K-REIT Asia Management Limited
Property Portfolio 5 commercial office assets valued at $2.1 billion
Listing Date 28 Apr 2006 on Singapore Stock Exchange
34(1) Excludes stakes of about 45% held by Keppel Land and 30.7% held by Keppel Corporation
Listing Date 28 Apr 2006 on Singapore Stock Exchange
Market Capitalisation $683 million as at 17 Jul 2009
Unit Price $1.030
Number of Units in Issue 663,283,153
Free Float 24.3%(1)
Aggregate Leverage 27.6%
Asset Portfolio
Property within/
near Singapore CBDPrudential Tower(1) Keppel Towers and
GE Tower
Bugis Junction
TowersOne Raffles Quay
Net Lettable Area
(sm) 10,074 39,963 22,991 41,360(2)
Number of Tenants 10 61 8 32
McGraw-Hill CompaniesGE Pacific
Seadrill Management
IE Singapore
Keppel Land Deutsche Bank
35
(1) K-REIT Asia owns approximately 44% of the strata area of the building
(2) Net lettable area of 41,360 sm represents one-third of One Raffles Quay’s total net lettable area and valuation of $985 million is for
one-third interest in One Raffles Quay
(3) Valuation as at 31 Dec 2008 by Knight Frank
Principal Tenants
McGraw-Hill Companies
The Executive Centre
KBC Bank N.V.
Seadrill Management
Singapore Business
Federation
Keppel Land
Intercontinental Hotels
Group
Deutsche Bank
UBS
ABN Amro
Tenure99 years expiring
14 Jan 2095Estate in fee simple
99 years expiring
9 Sep 2089
99 years expiring
12 Jun 2100
Valuation(3) $224 million
($2,066 psf)
$580 million
($1,347 psf)
$313 million
($1,265 psf)
$985 million(2)
($2,213 psf)
Committed
Occupancy
@ 30 June 2009
87.7% 93.3% 91.5% 100%
Asset Portfolio
Prudential Tower Keppel Towers GE Tower
Bugis Junction Towers
36
One Raffles Quay North Tower One Raffles Quay South Tower